Inside the Microsoft/Android patent licensing agreement

There is little doubt that patents are a valuable business asset, especially in ultra-competitive high tech markets such as the mobile device industry. When the technology in a smartphone -- which acts as a GPS device, telephone, gaming device, camera and more – is covered by literally thousands of patents, there is little doubt that companies in the space must put aside their competitive differences and forge smart business relationships. Thus, patent licensing agreements are the hallmark of the mobile device industry.

Take, for example, Microsoft. The computing giant’s Windows phones and tablets may not be setting the market on fire, but, thanks to lucrative licensing agreements, the company is raking in billions of dollars a year on sales of Android devices. That’s right, Microsoft is making a killing on the back of one of its fiercest competitors, Google.

While it’s common knowledge that Microsoft is making money by licensing patents to Google, the specific patents were unknown – until now. ArsTechnica reports that this week, the Chinese government released a list of more than 300 patents that Microsoft owns, and that the company believes entitle it to royalties from Android devices. The patent list includes homegrown patents developed by Microsoft, as well as former Nortel patents the company acquired as part of the Rockstar Consortium.

The Chinese government has been investigating Microsoft’s purchase of Nokia and reviewing the deal to determine if there are antitrust concerns. As part of the investigation, Microsoft supplied the Chinese with a list of patents it owns that it claims are necessary to build an Android device.